"With the oral diabetes drugs market at Rs 13,000 crore and growing, a key diabetes medicine Sitagliptin going off patent means a sweet spot for all. How does the billion-dollar pharma industry see an opportunity in a market with the highest number of diabetes patients in the world. Host Kiran Somvanshi chats with Nithya Balasubramanian, Director at AB Bernstein, Sheetal Sapale, Marketing President - AWACS, and Vikas Dandekar, Editor - Pharma at ET Prime.

Credits: CNBC-TV18"

This is an audio transcript of The Morning Brief podcast episode: Diabetes Drugs: Bittersweet Truth of Patent Expiries

BG Sound 0:01  

This is the morning brief from The Economic Times.

BG Sound 0:10  

On an average, I spend about eight to 10,000 rupees a month on insulin, oral medication and test strips. I've also started using continuous glucose monitor, which brings the total to somewhere about 18,000 rupees

BG Sound 0:25  

from last 10 years. I am a type two diabetic patient. Approximately I had to shell around seven to 8000 rupees monthly on my oral medical expenses.

BG Sound 0:35  

My 53 year old mother has diabetes. On an average around 5000 to 6000 rupees is spent on her treatment in a month, which includes medications and different kinds of tests.

BG Sound 0:49  

My husband is diabetic patient since last 22 years. So, the cost right now is somewhere around 800 to 1,000 rupees per month.

Kiran Somwanshi 1:04  

These and many more diabetic patients would probably heave a sigh of relief because

BG Sound 1:12  

one of the world's top selling Diabetes drugs Sitagliptin and sitagliptin with metformin just got cheaper by at least 50% for Indian patients. The news is that at least 40 companies have launched the generic version of global pharma company Merck known as MSD in India, their popular Diabetes drugs Januvia and Janumet. In the domestic market, experts expect the number of players selling these drugs to likely increase to up to 100 in the next three to four months.

Kiran Somwanshi 1:46  

In the world of pharma, a key drug going off patent often means a sharp correction in the prices and a reduction in the cost of treatment for the patients. Enter Sitagliptin a blockbuster diabetes drug that has gone off patent this month. But even as many are hailing it as another strong chance to make diabetes treatment affordable. That is only the half truth. So here is what happens when a patent of a key drug expires.

Nithya Balasubramanian 2:20  

Every pharma company which can make a copy of the drug can now participate and become more affordable and therefore more accessible to the Indian population as well.

Kiran Somwanshi 2:30  

accessible and affordable. Yes, but there is another side to the story as well.

Vikas Dandekar 2:35  

There will be a massive pill pushing. It might also lead to some doctors even over prescribing.

Kiran Somwanshi 2:44  

But above all,

Sheetal Sapele 2:46  

Though we say that there are 100 million patients almost 50% of the diabetes cases go undetected.

Kiran Somwanshi 2:54  

It's Tuesday 26th of July. You're listening to the morning brief from the economic times. I'm your host Kiran Somwanshi. And today we put the focus on diabetes drugs. Bittersweet truth of patent expires. In this episode, we speak to Sheetal Sapele, President marketing at AWACS a pharma market research firm, Nithya Balasubramanian, a veteran pharma analyst who is a director Sanford Bernstein and my colleague, Vikas Dandekar editor pharma and healthcare at Et prime. Together we probe into the popularly believed notion of diabetes treatment in India becoming cheaper with Sitagliptin patent expiry. What comes to your mind when I say that India is the diabetes capital of the world. You will presume that the incidence of diabetes is high in the country. But wait, the actual numbers may shock you. 

Sheetal Sapele 3:55  

So, the prevalence rate of diabetes in this country is around nine to 10%. So if I were to look into absolute number of patients that are there in the market, there would be more than 100 million patients in 2009. The prevalence was 7% and thanks for over unhealthy dietary aspects sedentary lifestyle or lack of exercise. That prevalence has moved from 7% to around 10% today.

Kiran Somwanshi 4:22  

That was Sheetal sharing a mind boggling detail and mind you 50% of these cases go undetected. But when diabetes is detected, the treatment itself undergoes many twists and turns to help the body cope with the rising blood sugar level.

Vikas Dandekar 4:38  

If you look at the 2013 rankings of the top Indian products, those were very surprisingly the first brand was Corex. Then it was Phensedyl then it was Augmentin and the fourth was human mixed art which is a insulin brand from Novo Nordisk. So, the top three brands were antibiotics or cough syrup. Now, if you go and see the data, the top brand is Mixed Art, which is again insulin. Then the next one is a Metformin which is glycomet, which is again about 650 - 700 gross product of USV. The fourth is Lantus is again a insulin from analog insulin from Sanofi and in the top 20, I think there will be five products. So, it only shows how the market has changed from acute antibiotics and cough syrup market to more chronic like diabetes taking a big position of it.

Kiran Somwanshi 5:46  

That was Vikas tracing the rise of diabetes in India in recent years. So the opportunity for the pharma industry to cater to this large growing need of Indians is huge, to say the least. In fact, the oral anti diabetes drug market currently stands at close to 13,000 crore rupees. It has 200 Odd companies, of which the top 20 Players control 80% of the market. Despite this wide presence, not all diabetes drugs have been affordable to the bulk of the diabetic patients in India. Nithya tells us why.

Nithya Balasubramanian 6:22  

If you go back before the Sitagliptin and the Gliptins and the other glyph Lawsons of the world came into came into the therapy. Most of the drugs available were metformin and Glyburide glycoside combinations and these products have been available for less than one rupee per day kind of cost. Suddenly, when these products came onto the market, they actually offered a lot of clinical benefit. But given the price point, which is about somewhere between 40 - 45 rupees per day, I'm sure it was unaffordable by a large pool of patients in India. And even if I assume only 20% of them are diagnosed, it's still a meaningful population, of which I can imagine very few were actually able to access this therapy because of the pricing. See, there been enough examples in the India market where reducing price has increased volume substantially. We have seen this in several molecules that went under price control. I remember I think augmentin is a great example. It's one of the largest brands around it's GSK's legacy brand. When it came under price control, the prices were slashed by half, but then volumes went up to 3x. So that's the kind of volume expansion I'm hoping to see with Sitagliptin as well once the pricing becomes more affordable.

Kiran Somwanshi 7:48  

Sitagliptin is an oral anti diabetes medicine that is used to treat type two diabetes. It's innovative company is US based Merck or MSD that sells it under the brand Januvia and Janumet, India's market leader Sun Pharma sells both these under brand Istavel and Istamet under license from Merck

Vikas Dandekar 8:08  

so Genovia was something that actually established the presence of Merck in India. Merck was in India decades before it actually made a re entry and Merck being Merck is a very high profile, extremely closely watched us pharmaceutical company. So when that product was brought in Januvia, the big question was at 42 rupees per tablet in India, is there even a potential of that product to make any impact? Because you can pay I'm talking about 15 years ago, 42 rupees was a very, very big price tag. And yet they were able to build a scientific case of how this product is entirely different from what was available so far. And quite fact fully. Januvia was a very important product at that time, because after sulfonylureas, the glimepiride and metformin or the insulin analogs which is like Lantus, from oral drugs point of view, there was nothing. So that made a very clear impact. And soon after that, Novartis also brought in its Galvus so between Januvia and Galvus that always used to be a very big fight. So depending on which part of the companies you hear, the stories used to be very different. Somebody will say galvus is better, somebody will say Januvia is better, and then to expand that footprint. What these companies did was very important. So Sun Pharma, and Novartis went with a bunch of partners. I think it did some partnerships with four or five companies. So that also meant that Merck was present in top cities, whereas Sun Pharma will take that product to with its massive field force, it could take it to so many other parts of the country. So, that also improved access.

Kiran Somwanshi 10:14  

Incidentally, galvus lost its patent in 2019 Taking away the shine from Januvia's patent expiry this year, as both are similar products. This is also the reason why Vikas is skeptical of Sitagliptin expiry

Vikas Dandekar 10:30  

Sitagliptin is not going to be like a huge story for the patient side because there are like Teneligliptin was launched in India, way back in I think 2015 or 16 by Glenmark, which is again from the same class of drugs there are obviously there are differences, a slight differences in the way they are efficacious. Certainly Glipton was there then in 2019, Novartis lost its patent on galvus, which is vildagliptin. Again, there was a similar crowding of the market, there was a massive scramble, everyone was like trying very hard to get prescriptions. In fact, doctors started sticking papers on their clinic thing please, if it is about vildagliptin medical reps are not allowed here. So and the prices also came down dramatically from 35 - 40 rupees to as low as eight or five rupees, right. So that obviously happens as soon as patent on the big drug expires, it remains extremely fragmented and the crowded market, every company wants to take a pile of that. So I was seeing genomic which is the Genovia Metformin combination for last month it was having a 32 Crore revenue. So, if you look at the market, it probably will be about 350 - 400 crore. So, of that market. In a extremely competitive market like India, a lot of companies will want to come in and take a share of that, from the patient's point of view. Yes, it does bring in one more potential product within the limits of affordability. But as a product itself, I don't think the doctors will want to make a switch from an existing patient who is already on some other DPP four to Januvia. So what will happen is, the newer patients may be prescribed sitagliptin, or Genovia copy, depending on how the doctor kind of assesses the product. 

Kiran Somwanshi 12:49  

But then what explains the scramble among the 50 Odd pharma companies that are planning to bring in over 100 brands to get a share of the 1000 crore rupees of the Sitagliptin market.

Sheetal Sapele 13:01  

Unfortunately, why this is happening is we really don't have many new molecules that are there in the market today. So the moment something goes updated, everybody jumps into that market, which is most of that opportunity. So when we talk about Sitagliptin losing patent and and many, almost 50 players have jumped into this market. And its big players as well as small players, very small unknown companies have launched the brands. Also bigger players like Lupin Glenmark Alchem Cipla Aristo Abbot, everybody has tried to enter this market to make the most of this opportunity. But if I were to look at the absolute consumption of OADs that has not increased year on year, so the number of patient pools remains the same. What we have seen phenomena is there is a shift in the prescriptions from the traditional drugs or traditional sulfonylureas to the gliptins. And we have also studied what is the percentage of sulfonylureas five years back the percentage of sulfonylureas was around 85%. Now in the last four or five years, it has come to 74%. It is essentially telling that there was a class of patients who was given sulfonylureas and they were the patients who are eligible for Liptus, but they couldn't afford it, because the cost of therapy was too high. Typically for Liptus, the cost per tablet is around 40 rupees. So the monthly cost of therapy would be around 2500, which many could not afford. Once a drug loses its patent. The cost of oil price for tablet goes down by around 1/3 to 1/4, and then the cost of therapy comes down from 2500 to 500. So for affording the patients who could not afford the liptis earlier, they can be easily shifted to the cheaper branded generics. And that's said and done. I was did some analysis of the moment 100 players come into the market what happens to all the players, typically the when we had seen what happened when the vildagliptin lost its patent Sitagliptin Tapani lost its patent and the innovator brands still maintain 40% of their share, just around six to seven other brands took another 40% of the market share, and the balance 90 or 80 brands, they contributed to the balance, I would say 20% of the market share. So everybody doesn't end up making big because there is something called as customer loyalty as well, the loyalty doesn't shift that easily, unless and until the competitor available or the alternative available is really really big. So, many of the companies are for jumping into this competition, hoping that I will at least get a pie or a part of the patient group, which will continue taking my drug for a longer time. So, this is an opportunity and it is justified. If you look at Sun Pharma Sun Pharma has played very smart Sun Pharma, they had their partnership with MSD. And they had brands Istavel and Istamet where the price per tablet was around 40 rupees. Now, after the products when updated, the price per tablet for Istavel and Istamet might have come down to 10 rupees and 13 rupees. So if there was a doctor who was already prescribing Istavel and Istamet very difficult for the doctor to shift from Sun Pharma brand to a new generic which has come into the market, because whatever was available at a higher price is available at a lower price now. So Sun Pharma has managed to safeguard their prescription share to a great extent we'll have to wait and watch how it happens.

Kiran Somwanshi 16:45  

That's an interesting account of how pharma companies compete. But the stiff competition also leads to players following some sharp practices.

Vikas Dandekar 16:56  

That's the sad story of the Indian generic market, whenever there is a massive opportunity, almost all of them jump into the market. Really, the the mindset is the same of milking a product segment that has just opened. So there will be a massive pushing, it might also lead to some doctors even over prescribing. So what we have also seen is given almost every doctor doesn't follow the same steps about the shift of medicines, some may even want to go with say for example, if the sugar is very high, and it is not getting controlled in with sulfonylureas, the person may be given DPP four and a mix of the two like gliflozin. So my thing is that this might also lead some doctors to move their patients right after Metformin to more of DPP fours, so that the doctors will have to make an effort on exactly how they analyze which products suit which patient. So to me, at the top end, everyone fights for those prescriptions at the bottom end I think it takes a long time for these drugs to reach the lower income segments or smaller towns and villages of India, which is probably a very big market, but remains extremely untapped. Now we are seeing in the last couple of years, some companies have made a very strong bid to kind of approach the rural markets with these new products. But that's like a slow drip. 

Kiran Somwanshi 18:41  

Given this industry dynamics, one would wonder which companies are going to be the top beneficiaries from the patent expiry. 

Nithya Balasubramanian 18:49  

I do believe sun will be one of the biggest beneficiaries because they already have an established brand. They have established equity with the physicians as well. And I think they're making sure that they're protecting as much of the market share as they can by being competitive on pricing. So if my assumptions are right, and Sun is actually able to manufacture the product on their own as well and no longer continue sourcing the product from Merck, that I think the gross margins will expand substantially. So I would for sure assume that Sun is one of the bigger beneficiaries. Beyond that, I think companies with established presence in diabetes and cardiology, so which would be Lupin USV Cipla to some extent, I think these are all companies that have meaningful position in diabetes and cardiology, I can imagine them launching a Sitagliptin brand brand torrent, and therefore being beneficiaries of the expanding market itself. 

Kiran Somwanshi 19:52  

And how much price reduction can the doctors and the patients expect? 

Nithya Balasubramanian 19:55  

I think going back to some of the other patent expiries. If you look at vildagliptin, which went off patent in 2019, or even more recently, but I think one of the SGLT2s went off patent, I would assume anywhere between 50 to 70% discount to where the prepatent expiry pricing goes.

Kiran Somwanshi 20:18  

That's a marked reduction in the cost. In fact,

BG Sound 20:23  

Denmark has already launched eight different combinations of Sitagliptin based drugs under their brand name, while zydus has launched their versions at 60% discount to the innovator price,

Kiran Somwanshi 20:36  

it is going to make a meaningful difference to those who have been prescribed this medicine. Interestingly, this is what the diabetic patients whom we spoke to, had to say

BG Sound 20:47  

the cost of medication does come down, it will be a great relief and it will be one thing of my mind, not just me, but other people living with diabetes in this country as well. They will be able to afford these branded pills and insulin, which have a longer lasting effects.

BG Sound 21:04  

Approximately I had to shell out around seven to 8000 monthly on my oral medical expenses and this is too much for a common man like me, if I can see you this money, it can be a great help, I can really spend this money on something important rather paying all my medical bills.

BG Sound 21:21  

The cost right now is somewhere around 800 to 1,000 rupees per month, we can save that much amount. Financially it can be helpful for the family,

BG Sound 21:35  

Mera monthly overall medicine expenses, hai che hazaar rupay tak ka yeh agar kam ho jaaye tho yeh paise kahin doosri jagah doosre acche jagah pe kaam mein aa sakte hai ghar karche ke liye kaam mein aa sakte hai kuch samaaj seva mein aa sakte hai.

Kiran Somwanshi 21:50  

But as one can see, the cost of the medicine is only one component of the diabetes treatment.

Sheetal Sapele 21:55  

So this entire thing that we have, we keep on reading everywhere. Now, the treatment of diabetes becomes affordable because drugs are losing their patent, it is only one section, the part of the drug, the cost per strip has come down, but the doctor's fees remain the same. The tests that are required for checking the glucose levels remain the same and they are quite expensive. When I say Sitagliptin earlier, the cost per month was 2500. It was just 2500 in terms of the cost of the medication, a doctor checkup, then there are some other tests that would take to the cost per month to at least around 7000 to 10,000. And that is expensive not everybody can afford.

Nithya Balasubramanian 22:40  

I think the real problem to address when it comes to India pharma market is more the healthcare infrastructure availability rather than affordability of drugs. See, honestly given that I look at a lot of other different markets as well, I can tell you that prices in India are one of the lowest, I think over a period of time given the fact that we are a branded generic market. And most categories of products actually see a lot of competition 40 to 50 brands, in any molecule competition has actually made drugs fairly affordable. I would rather that we focus us the industry and the government focus efforts on improving availability of quality physicians, improving availability of primary care, secondary care and tertiary care across the geography. And I think that'll make more of a difference than, you know, trying to push for price cuts and therefore making drugs more affordable. I would also say that the MNC should also be a bit more responsible in how they think about pricing these products for emerging markets. I think given that they are innovating and they have the pipeline, they do have the burden of making sure that it's more accessible as well. I think they have come a decent way I would say so Sitagliptin that they've been talking about on on this chat was priced when it was launched, it was priced at one seventh, the price that these guys were charging in the US market could it have been lower. Yes. But I think they still were still tried to bridge at least a little bit of the gap in terms of making it a bit more affordable. But I would like the government to really step up in terms of the amount of healthcare spend and healthcare budgets and therefore, reduce the out of pocket expense and the burden on the patient. 

Vikas Dandekar 24:33  

So, this will be a long way to watch on whether government insurance is helping in OPD care mostly what we see is that insurance covers indoor patient expenses. OPD will be very important at the lower end of the income curve. What we have seen hospitals really taking a big chunk of the entire healthcare expenses. And pharma executives will always argue that why is the entire focus of price controls on drugs and not on the overall medical expenses. And that's been a very big debate. So we need to really look at a holistic view we've seen just last couple of days, we've seen the NPPA and the government trying to make efforts on how to lower the prices of products. That being a good step. Nobody can put an argument against that. But the point that remains to be seen is, are we really letting the other side, the healthcare of hospital side, or even the medical doctors who are practicing independently? Are there any controls on those there are no controls from there. and that's probably if you really go to a specialist, drug endocrinologist today, in a good hospital, probably the charge of the first visit is about 1500 rupees. Now, that's a massive expense to have. And then the follow up charges will be about 700 or 1000 rupees. That's far more than what a drug will be. And that's something that the government may like to look at how it it can be done, we've seen many steps being taken. But then there are many ways in which it can be evaded. Also.

Kiran Somwanshi 26:27  

It's not about low cost drugs anymore, but about overall affordable health care. There is a clear need for a holistic approach for reducing the cost of medication for the patients. Sitagliptin's patent expiry is not a panacea to solve the problems of rising cost of diabetes care. The fact that there are at least three more diabetic treatment drugs going off patent in the next two to three years brings more good news for the patients fighting high sugar problems. But if the cost of other components of the treatment remain uncontrolled, drug cost alone coming down will not change the scenario much. And this is true of most other therapies. cancer, tuberculosis and HIV need cheaper treatment options too where unfortunately there is no major patent expiring in the near future. But their disease burden is still huge in the country. waiting in the wings for the patterns to expire or bringing in price controls cannot be a reliable or sustainable healthcare policy. With the COVID pandemic waning we have to make sure our local and central government do not ease their attention and spending on health care. You have been listening to diabetes drugs bittersweet truth of patent expires with me Kiran Somvanshi on the morning brief. Thank you Vikas, Sheetal and Nithya for sharing your insights. 

This episode was produced by Vinay Joshi from the economic times and Soundarya Jayachandran from Aawaz. Sound Editors Indranil Bhattacharjee from the economic times and Swati Joshi from Aawaz. Executive Producers Anupriya Bahadur and Arijit Barman. We hope you liked this episode. Do share it on your social media networks. The morning brief drops every Tuesday Thursday and Friday. do tune in to et play our latest platform for all audio content, including the morning brief. Have a great week ahead.

BG Sound 28:36  

Disclosure from Nithya Balasubramanian. The analyst holds long positions in both Cipla and Lupin. All clips used in this episode belong to their respective owners. Credits are mentioned in the description.

This transcript has been automatically generated. If by any chance there is an error please send the details for a correction to: themorningbrief@timesgroup.com We will do our best to make the amendment as soon as possible. 

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